Businesses Will Have to Scramble for Quarters
The destruction of the World Trade Center on Tuesday comes only weeks after a prominent Manhattan developer and landlord took control of the twin towers in one of the nation’s largest real estate deals.
The property loss is expected to throw New York’s real estate market into turmoil as countless businesses scramble to find temporary quarters or, in some cases, relocate outside the city permanently, brokers said.
“It will be pretty staggering,” Michael Burlant, a New York real estate broker at Cushman & Wakefield, said of relocation and recovery efforts.
The World Trade Center’s about 10 million square feet of space--larger than the office markets of downtown San Diego or San Jose--was nearly fully occupied by firms attracted by its prestigious location, sprawling floor plans and unobstructed city and river views, brokers say.
Located a few blocks off Wall Street near the Hudson River, the 110-story, aluminum-clad towers and neighboring skyscrapers served as the backbone of New York’s teeming financial district. The World Trade Center’s tenant roster included some of the business world’s most prestigious names, including Bank of America Corp. and Credit Suisse Group. The property’s biggest occupant, financial services firm Morgan Stanley Dean Witter & Co., employed more than 3,500 people in its individual-investor business.
The immediate neighborhood is home to the headquarters of such financial heavyweights as American Express, Lehman Bros. Holdings and Merrill Lynch.
“They were symbols of the financial center of the United States,” said Los Angeles real estate broker Whitley Collins of CB Richard Ellis, who recently negotiated a lease in one of the collapsed towers. His client, Regus Business Centres, moved into the 93rd floor of the south tower--the first to fall--about two months ago. “They wanted to be in downtown Manhattan in one of the world’s most recognizable buildings,” Collins said.
It was only late July when veteran New York developer Larry Silverstein celebrated his victory over much larger bidders by completing the $3.2-billion deal that put the 110-story towers under his control.
Silverstein and his partners purchased a 99-year lease from the World Trade Center’s owner and developer, the Port Authority of New York. Part of the deal included Los Angeles-based shopping mall owner Westfield America, which leased the giant shopping center located underneath the towers.
Silverstein also owns the neighboring 7 World Trade Center, a 47-story tower that collapsed hours after the twin skyscrapers were destroyed.
A spokesman for Silverstein said the investor was monitoring the situation, Bloomberg News reported. The spokesman, Steve Solomon, said he had no further information. Westfield officials weren’t available for comment.
When the deal was announced in April, Silverstein, 69, told the New York Times: “I’ve been looking at the Trade Center for years, thinking what a great piece of real estate, what a thrill it would be to own it. There’s nothing like it in the world.”
The disaster claimed a relatively small chunk of Manhattan’s 390 million square feet of office space. But businesses could face a short-term spike in rent and a shortage of space as dislocated tenants search for new offices in a market that remains relatively tight. Making matters worse is the lack of space in large, modern buildings like those of the World Trade Center.
“There are not that many blocks of large space that are currently left,” Burlant said.
Long term, however, New York could lose major office tenants if many businesses opt to leave the city for less expensive and lower profile structures in the suburbs, real estate observers said.
“Companies will be sure that the safety of their employees is their foremost goal,” said Tony Morales, a leasing specialist in Los Angeles.
